Now Is the Time to Consider Buying Level 3 Communications

Level 3 Communications (LVLT) looks ready for a large move to the upside. The share price could double or more over the next 3 to 6 months. Earnings are due next week and I expect LVLT will beat estimates and guide upward. Institutions own 80% of the float and added 4.5 M shares last week above $1.15. LVLT has 140M shares short or about 10% of the float and a short squeeze could drive the share price over $1.50 come next week.

Some Positive Notes:

Dan Rayburn, a Principal Analyst with Frost & Sullivan, says Level 3's (LVLT) content delivery network business is winning deals and could come in at $100M, which is double his estimates, thanks to deals with Comcast (CMCSA), Microsoft (MSFT), Netflix (NFLX), Fox (NWS), Yahoo (YHOO), and others.


Telefonica Selects Level 3 Communications, Inc. For North American Network
March 26, 2009: Level 3 Communications, Inc. announced that the Company has expanded its relationship with Telefonica International Wholesale Services to establish a dedicated wavelength network across North America, which represents the largest single capacity commitment in Level 3 history.

Under the terms of the 10 year agreement, Level 3 will transport voice, data and Internet traffic for over 250 million Telefonica customers from Europe and Latin America. The dedicated wavelength network includes triverse routes - with three alternative fiber paths - between high-traffic locations and route diversity across the remainder of the network.

February 12, 2009: JANCO upgrades Level 3 Communications from Accumulate to Buy. $2 Target.

Given the 52 Week high of $4.48, buying LVLT at the current price of $1.04 offers low risk with very good upside reward.

Disclosure: Long LVLT

Comments

[shrike:]

Prem Watsa, the second greatest value investor on the planet, has accumulated over 150 million shares and is leading a consortium of shareholders providing new financing for LVLT debt.

The largest shareholder (SEA) just scored big on the JAVA/ORCL deal and is a large shareholder of FFH (Watsa's company).

That is good enough for me. Long LVLT.

Apr 26 10:16 AM

[RonB:]

Level 3 now has positive cash flow (annually, not in Q1), improving margins, its industry is growing rapidly, partiularly in content delivery and video, two outstanding investors have added substantially to their holdings, it is run by very competent management, and is the low cost provider. All this for $1 a share. The upside is substantial. I own Level 3 shares.

Apr 26 10:51 AM

[CarlK:]

I don't believe in idolatry, nor does Mr. Hamblin Watsa if he is of the same religious faith that I think he is from. On the other hand, that religion I am thinking of, sometimes, does pray to saints as third party messengers or "conduits" versus going directly to God.

As a matter of fact, my own opposing belief to IDOLATRY is one of the ten commandments for any Christian faith observers.

My point is that, one must give credit where credit is do. If I am not mistaken, LVLT is Sam Mitchell's pick, NOT Mr. Watsa's.

In the end, maybe he'll have to point blame in Mitchell's direction, like Buffett did recently to Lou Simpson for his BAC pick when called out Becky Quick, she's definitely not slow, on cnbc.

It will be interesting to see how Mitchell, a Watsa third party "conduit" for honing in on successful investments, ends up being depicted by Watsa and his crowd.

Let us pray to Mitchell saints, then.

Lastly, the poster citing up to date short interest seems to have it wrong by about 20M shares too many according to most recent data. imo

Apr 26 01:24 PM

[CarlK:]

One last foolish comment for all the fools amongst us. Watsa's holdings across all subs, are approx. 20 percent of outstanding shares of 1.65B whilst he files aggregate shares including conversions, but excluding fully diluted numbers approaching 2.2B today, and authorized shares totaling 2.5B shares after they have their way at the upcoming vote. :-(

You might think this company was Exxon(XOM) with all the shares they've authorized, issued, reserved, and are outstanding without commensurate revenues, earnings, ebitda or cash flows for so many years.

Their totals, however, signify 308.693M shares.

www.sec.gov/Archives/e...

Watsa, etal, in the mean time, are being paid usury rates while they wait for the excessive numbers of shares flowing their way after usury, assuming these fools at (3) are successful.

Let me be clear that, there is nothing SAINTLY by Watsa and his crew for non FFH shareholders in this regard. Crowe and his minion have given away the "store keys" to them.

I'll be happy to shut up when the Crowe Blow stops, and the revenues and corresponding metrics for real shareholder value meet or exceed the "addressable market" opportunities he has yapped about for too many years now. imo

Apr 26 02:05 PM